“Inflexible exchange rates” in some countries “have tended to inhibit adjustment of unsustainable global imbalances,” Yellen said today in a speech in Paris. “Such imbalances appear to have fostered the buildup of vulnerabilities in the run-up to the recent financial crisis.”

Yellen said that “some advanced economies struggle with weak demand, high unemployment and disinflation” without elaborating on the outlook for the U.S. economy and monetary policy. Her comments, while not identifying China, echo a speech last month by Fed Chairman Ben S. Bernanke, who said countries with large trade surpluses should let their currencies appreciate to aid global growth.

“If deficit countries curtail spending without offsetting spending increases in the surplus countries, aggregate demand would decline, with adverse consequences for the global economy,” Yellen said during a panel discussion at a symposium hosted by France’s central bank.

Policy makers including European Central Bank President Jean-Claude Trichet and Bank of Japan Deputy Governor Kiyohiko Nishimura also appeared as part of the group. Trichet said that “excess volatility and disorderly movements in the exchange rate have adverse implications for financial and economic stability.”

‘Strong Growth’

Yellen cited the challenges for advanced economies and said that “many emerging market economies face increasing inflationary pressures and capital inflows amid strong growth.” She didn’t refer to the Fed’s program of purchasing $600 billion in Treasuries, a stimulus plan criticized by officials from China and Brazil.

“We must recognize that countries face diverse challenges in such a transition” to a system with “more-flexible exchange rates,” freer capital flows and “independent monetary policies,” Yellen said. “For countries with undervalued currencies, the adoption of more flexible exchange rates requires an internal shift in resources across sectors -- a transition that takes time.”

‘Cooperative Spirit’

Yellen called for a “cooperative spirit among policy makers” to aid the global economy, saying “we must also support countries’ efforts to address their more immediate challenges.”

Bernanke told U.S. lawmakers this week that he doesn’t see any evidence of a “major shift” away from the dollar as the world’s main reserve currency. The U.S. currency accounted for 61 percent of $9 trillion in global international reserve holdings as of September. That’s down from 72 percent 10 years earlier.

China’s central bank said this week that a trial allowing the use of yuan settlement for cross-border transactions will be expanded to the entire country from the current 20 provinces. The central bank will “actively respond” to foreign countries seeking to use the yuan as a reserve currency, and will help overseas firms raise yuan-denominated capital for investments outside China, it said.